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Steven Madden, Ltd. (SHOO) and Allbirds, Inc. (BIRD) are internationally renowned shoe and accessory manufacturers. SHOO designs, researches, markets and sells fashion-forward designer and private label footwear, accessories and apparel for women, men and children.
On the other hand, BIRD manufactures and sells footwear and clothing for men and women. It sells its products through its retail stores as well as online.
The growing interest in health, fitness and fashion has driven the demand for athletic and fashionable footwear. Expanding digital presence has also helped shoe companies increase sales over the past year.
Despite supply chain disruptions and high inflation, growing interest in footwear and resilient consumer spending should keep shoe companies afloat. The global footwear market is expected to grow at a pace 2.5% CAGR to reach $330.60 billion by 2028. Therefore, SHOO and BIRD stand to benefit.
BIRD is a winner with returns of 13% over the past week against SHOO’s gains of 2.6%. But which stock is a better buy now? Let’s find out.
Recent financial results
For the first quarter of fiscal 2022 ended March 31, 2022, SHOO’s net sales increased 55.3% year-over-year to $557.34 million. The company’s gross profit was $227.90 million, up 63.8% from the prior year period. Its adjusted operating profit was $94.43 million for the quarter, indicating a 165.2% increase over the prior year period.
While its adjusted net income rose 172.6% year over year to $73.38 million, its non-GAAP EPS rose 178.8% to $0.92. The company had cash and cash equivalents of $170.35 million as of March 31, 2022.
For its fiscal 2022 first quarter ended March 31, 2022, BIRD’s net revenue increased 26.4% year-over-year to $62.76 million. The company’s gross profit was $32.60 million, up 26.2% from the same period last year. Its operating loss was $19.98 million for the quarter, indicating a 91.6% year-over-year improvement.
BIRD’s net loss was $21.88 million, an increase of 61.8% over the prior year period. Its loss per share was $0.15, indicating a 40% year-over-year decline. As of March 31, 2022, the company had $239.72 million in cash and cash equivalents.
Expected financial performance
SHOO’s EPS is expected to increase 28.6% year-over-year in fiscal 2022, ending December 31, 2022, and 10.3% in fiscal 2023. Its figure revenue is expected to grow 15.9% in fiscal 2022 and 5.8% in fiscal 2023. Its EPS is expected to grow at a rate of 10% per year over the next five years.
Analysts expect BIRD’s EPS to remain negative in fiscal 2022, ending March 31, 2022, and fiscal 2023. Its revenue is expected to grow 22.6% from year-over-year in fiscal 2022 and 27.2% in fiscal 2022. Its EPS is expected to decline at a rate of 15.2% annually over the next five years.
Evaluation
In terms of non-GAAP forward P/E for the next fiscal year, SHOO is currently trading at 9.89x, versus negative BIRD at 11.98x. In terms of EV/sales over the last 12 months, SHOO’s 1.27x compares to BIRD’s 1.43x.
Profitability
SHOO’s revenue over the last 12 months is 7.1 times greater than that of BIRD. In addition, SHOO is more profitable, with 15.9% EBITDA margin relative to the negative value of BIRD.
In addition, SHOO’s net profit margin, ROE and ROTC of 11.8%, 29.8% and 20.9% compare to BIRD’s respective negative values.
POWR Rankings
While SHOO has an overall rating of B, which translates to Buy in Our Own POWR Rankings system, BIRD has an overall F rating, which is equivalent to Strong Sell. POWR ratings are calculated by considering 118 separate factors, each weighted to an optimal degree.
SHOO was rated B for quality, consistent with its industry-leading profitability ratios. SHOO’s 12-month ROE of 30.1% is 77.5% higher than the industry average of 17%. BIRD’s D rating for quality is in line with its negative profit margins.
SHOO has an A rating for Sentiment, reflecting its impressive earnings growth expectations. SHOO’s EPS is expected to increase 28.6% year-over-year to $3.01 for fiscal 2022 ending December 31, 2022. BIRD’s C rating for Sentiment is in line with its estimates negative earnings for the 2022 financial year.
Of the 68 shares rated B Fashion & Luxury industry, SHOO is ranked #8, while BIRD is ranked last.
Beyond what we’ve stated above, our POWR rating system rated SHOO and BIRD for stability, growth, value, and momentum. Get all BIRD ratings here. Also, Click here to see additional POWR ratings for SHOO.
The winner
The growing demand for trendy and eco-responsible shoes should allow both SHOO and BIRD to benefit from it in the coming quarters. However, a relatively lower valuation and higher profitability make SHOO a better buy here.
Our research shows that the odds of success increase if one invests in stocks with an overall POWR rating of Buy or Strong Buy. Click here to access top-rated stocks in the fashion and luxury industry.
SHOO shares were trading at $34.01 per share on Thursday afternoon, up $1.35 (+4.13%). Year-to-date, the SHOO is down -26.01%, compared to a -17.49% rise in the benchmark S&P 500 over the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a particular interest in researching market inefficiencies. She is passionate about educating investors, so they can succeed in the stock market. After…
